Non-Admitted Insurer

What Does Non-Admitted Insurer Mean?

A non-admitted insurer is an insurance company that is not licensed to underwrite risks in a specific territory.

Despite this, non-admitted insurers are permitted to sell insurance policies in that territory. This enables them to provide coverage for risks that admitted insurers may not be willing or able to insure. However, purchasing policies from non-admitted insurers may involve less financial security for policyholders.

Insuranceopedia Explains Non-Admitted Insurer

The insurance industry is heavily regulated, with licensing requirements, enforced best practices, and various mechanisms designed to ensure that insurance products are reliable investments and that policyholders are treated equitably. However, insurers not officially authorized to operate in a specific territory are not bound by these regulations. This allows them to issue higher-risk policies and insure clients that admitted insurers consider too risky. For example, a homeowner with property in a wildfire zone or coastal flood area may need to buy high-risk homeowners insurance from a non-admitted carrier after standard insurers decline the application. Some industries depend on these carriers almost entirely; most cannabis dispensary business insurance, for instance, is written by non-admitted insurers because admitted companies won’t take on businesses tied to federally restricted products.

While purchasing a policy from a non-admitted insurer can carry additional risk, this is not always true. Industry ratings, for example, might show that a non-admitted insurer has a stronger financial standing than an admitted insurer.